Market report: Thursday close

SOME of the heaviest turnover today was seen in market newcomer Drax, which failed to live up to expectations as more than 130m shares changed hands.

The price opened at 500p but dipped to 488p before settling at 490½p. Dealers reported heavy two-way business as hedge fund owners cashed in their chips while institutional investors struggled to establish a weighting in the stock.

Drax was floated after the owners of the Yorkshire-based power station failed to attract buyers for the business at the right price. City speculators says its time on the stock market will be shortlived, with at least two rival US power generators and our own International Power, 2½p better at 246½p, likely to try their luck at taking out the company.

Share prices traded in a narrow range with the FTSE 100 index falling 25.8 to 5495.3.

Miner Vedanta Resources soared 54½p to a best-ever 835p as one of the large City players forecast it will be a big beneficiary of record copper and zinc prices.

US broker Morgan Stanley has jacked-up its 12-month target on Vedanta from 700p to 1110p and continues to rate it 'key overweight' recommendation among the midcap miners.

This came after the broker raised its long-run price forecasts for zinc by 23% and for copper and aluminium by 10%, based on continued huge demand from China.

Vedanta's performance today was against the general trend of the sector, where losses were seen in Rio Tinto, down 32p to 2455p, BHP Billiton, 12½p to 878½p, and Xstrata, 31p to 1326p. Lonmin slumped 48p to 1592p after broker UBS placed 4.89m shares at 1593p.

The world's biggest advertising agency, WPP, fell 6½p to 617½p after Credit Suisse First Boston cut its rating from outperform to neutral and lowered its sights on the share price from 690p to 660p. Curiously, the broker believes prospects for WPP are being undermined by a rising oil price which is forcing its clients to rein in their spending on advertising and promotions.

Shares in engineering, electricals and materials group Cookson climbed 21p to an eight-month high 400p after selling its laminates business for £51m to Isola, a Texas Pacific-owned business now run by former Cookson chief executive Ray Sharpe.

The proceeds will go towards reducing Cookson's debt and plugging a £200m pension fund deficit, potentially making the group more attractive to predators. Broker Panmure Gordon rates Cookson a buy with a 460p target.

US investment bank JPMorgan has increased the price targets of the companies that make-up its UK property portfolio by 10%. Land Securities rose 49p to 1659p, British Land 20½p to 1023p, and Hammerson 19p to 999p.

Sportswear supplier Umbro, which has just extended its sales and distribution deal with the Football Association for four years, rose 6¼p to 151¼p. JPMorgan Cazenove placed 20m shares with institutions belonging to fund managed by Doughty Hanson at 150p. Doughty will continue to hold 28m shares, or a 19% stake.

BioFuels Corporation, which makes diesel fuel from rapeseed, fell 6p to 87½p after rival D1 Oils walked away from bid talks. This will come as bad news for the likes of hedge fund Tosca Fund which, one way or another, owns almost 23% of Biofuels. D1, up 4½p at 220½p, made its approach just days after Biofuels achieved extra funding from the banks.

Booming Asian economies lay behind news of forecast-busting profits at Robert Walters, the global recruitment specialist. It expects pre-tax profits for 2005 to be 'somewhat ahead' of expectations. Japan is one of its biggest markets and appears to be ending the year on a strong note, reflecting the performance of financial markets there.

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Broker Numis Securities responded by raising its pretax profit forecast from £10.5m to £12m, and for next year from £12.5m to £14m. It has repeated its strong buy recommendation on the shares, up 8½p at 142p, and lifted its sights from 178p to 190p. Numis says the update is also positive for rival Michael Page, 1½p dearer at 269p.

News of another Eastern Europe residential property developer joining Aim. Some 27m shares in Engel East Europe were placed at 108p by broker KBC Peel Hunt, valuing the company at £95m. They later traded at 116p.